Friday, November 22, 2013

Whether your
CPF can be used to repay housing loans after 55, depends on how much CPF savings
you have at 55, and how much you have already used for housing.

When you
turn 55, a Retirement Account (RA) is created using savings from first your
Special Account, then Ordinary Account (OA) to meet the Minimum Sum (MS)
relevant to your cohort. While the MS provides monthly payouts from your draw
down age, the balance in your OA can be used for housing loan repayments.

Members who are able to set aside more than half of the MS, will be able
to use the amount in excess of half of the MS for housing loan repayments.

For example:

If you continue working after 55, your
CPF OA contributions can also be used for housing loan repayments.

However, housing withdrawal limits may apply. This is to safeguard members
from overspending on their housing loan repayments at the expense of their
retirement savings.

Wednesday, November 7, 2012

IF A person wills his Central Provident Fund (CPF) money to a bankrupt, the funds will be channelled towards settling the bankrupt's debts when the CPF account holder dies.

Any money left after paying off creditors will be held in trust, that is, managed on behalf of the bankrupt, the Court of Appeal has ruled.

The highest court in the land also ruled that if information on the bequeathed sum comes to light after the bankrupt is discharged from his debts, the money still has to go to the Official Assignee (OA), who will hold it in trust.

These definitive rulings were made by the Court of Appeal in a judgment released last week, after a test case in which a discharged bankrupt sought to keep $102,000 left to her by her late sister in CPF money and SingTel shares.

Lawyers say the rulings underscore the need for CPF account holders to pick their nominees carefully, since funds meant as bequests to nominees who are bankrupts will go to creditors instead.

In the test case which led to the rulings, Madam Lim Lye Kiang was a bankrupt when her sister Lye Keow died of cancer in March 2008. Madam Lim, 52, a kitchen helper, had been a bankrupt for 11 years, owing $1.18 million to 13 creditors.

Under the law, all assets belonging to a bankrupt are held by the OA for distribution to his creditors. Hence, when Madam Lim Lye Keow died, the CPF money she bequeathed to her sister should have been transferred to the OA.

But the OA was unaware of the bequest. In October 2009, the OA sought a court order to discharge or release the bankrupt Madam Lim Lye Kiang from her debts on the basis that she had been bankrupt for more than a decade, and had made monthly contributions of up to $150 to her bankruptcy estate.

She also had no further realisable estate.

After her creditors each got $11,664 in a final dividend declared by the OA, she was discharged in November 2009.

Two months after this, when she sought to claim the $102,000 from CPF which her late sister had left her, the CPF Board transferred the money to the OA.

The OA then applied to the court for an order to distribute the money among Madam Lim's creditors.

In October last year, the High Court agreed with the OA and rejected Madam Lim's argument that since the CPF authorised the release of the money after she had been discharged from bankruptcy, the money belonged to her.

The judge also held that the protection extended to the money of CPF account holders did not extend to nominees like Madam Lim, and that the money could thus go to the OA to settle debts.

Madam Lim appealed and the appeal court ruled that the money had to go to the OA because she was a bankrupt at the time of her sister's death. Her lawyer Foo Soon Yien argued that her discharge from bankruptcy had the effect of revesting the entitlement to the money in her.

The Court of Appeal rejected this, agreeing with the OA's lawyer Lim Yew Jin that the discharge did not reinstate Madam Lim's right to the money.

The court, comprising Judges of Appeal Chao Hick Tin, Andrew Phang and V. K. Rajah, held that bankruptcy laws make plain that the administration of a bankrupt's estate may continue after his discharge, as in this case.

It said the OA may have decided that a bankrupt was deserving of discharge, but may not necessarily by then have completed distributing the bankrupt's assets.

The bankrupt's discharge releases him from debts, and does not affect the debts themselves, said the court, so assets which come to light after a final dividend is paid to creditors will be held by the OA in trust for the discharged bankrupt.

It falls to the ex-bankrupt to apply to the OA to ask that the assets be revested in him; he may appeal to the courts if the OA rejects his request or sets conditions.

The CPF Board said a year ago that a CPF member does not need to make a nomination if he wishes to distribute his CPF savings under the intestacy laws.

'When making a nomination, he should consider who is to receive his CPF savings and how much each nominee should receive, taking into account family and other circumstances,' CPF said.

Thursday, May 17, 2012

ONLY a handful of insurers here offer coverage for million-dollar supercars like Ferraris and Lamborghinis.

The insurance policies do not come cheap, with annual premiums for Ferraris, for instance, starting from as high as $30,000, said insurance brokers and importers of these high-end cars.

This is almost 30 times the premium for, say, a medium-sized Japanese family sedan. But the same procedures apply when claims are made, whether the car involved in an accident is a high-end or a run-of-the-mill car.

A check by The Straits Times yesterday showed that while AXA Insurance, Liberty Insurance and Chartis will accept such business, at least one major industry player - NTUC Income - does not.

'NTUC Income does not focus on the supercar segment of the market,' said its vice-president of branding and public relations Karen Yew, adding that the company prefers to focus on the needs of a mainstream market.

Dealers and parallel importers, such as Meridian Automobile, said that after owners have submitted a police report following an accident, insurers will typically assess the condition of the car and examine the evidence - to determine who is at fault - before paying out claims.

Provided the driver is not at fault, the insurer may have to foot the entire repair bill of his car although it can claim that amount from the other motorist. If the driver is at fault, the insurer is not liable for costs of repair but will have to pay the claims from the other motorist.

Mr Joey Lim, 45, owner of workshop Harmony Motors, said repair bills of supercars can escalate if certain components or spare parts have to be flown in.

Should the car be considered a total loss - meaning it is beyond repair or if the cost of doing so exceeds the current market value of the vehicle - it will often be replaced.

This may not be easy though for rare models like the one involved in the accident last Saturday that claimed three lives, including Chinese national Ma Chi, 31, who was behind the wheel of the rare Ferrari 599 GTO.

The high-end supercar that hit a ComfortDelGro taxi cost about $1.4 million. The Ferrari was sold only to a select few here as it had a limited production run. The Straits Times understands it was insured by AXA.

'It's impossible to find parts for a GTO in Singapore,' said vehicle sales executive Desmond Lim who works at parallel importer Executive Automobile, which sells around 10 Ferraris a year.

If a replacement car cannot be found, the insurer may opt to pay what it is worth in cash to the owner or, in the event that he is no longer alive, to his estate.

The Land Transport Authority said 17 new Ferraris were registered here as of March this year. In all, there were 4,149 Porsches, Maseratis, Ferraris, Lamborghinis and Aston Martins registered here last year, up from 3,376 the year before.

4 FAIR will build on the foundations laid by the industry-led
Committee on Efficient Distribution of Life Insurance (CEDLI) which, in 2000,
made far-reaching recommendations for the insurance industry on areas such as
needs-based advisory process, disclosure practices, and training and competency
requirements. FAIR will cover all firms engaged in the financial advisory
business – including banks, insurers, stockbrokers, financial advisory firms –
and their representatives, and all investment products regulated by MAS under
the Financial Advisers Act (CAP. 110).

5 Said Mr Lee Chuan Teck, Assistant Managing Director for
Capital Markets, MAS “Our vision is for financial institutions to put customers
first, and for customers to have access to affordable life insurance and
investments to meet their financial planning and retirement needs. We are not
there yet. Preliminary findings in a recent Mystery Shopping exercise that we
commissioned show that up to one-third of recommendations by FA representatives
were “clearly unsuitable” and representatives were not upfront in disclosing
fees and charges. FAIR is an opportunity for financial institutions and
consumers to build mutual trust, towards sustainable growth in the FA industry,
and a more secure financial future for Singaporeans.”

6 MAS invites consumers and industry practitioners to work
with us to achieve our objectives of financial institutions that consistently
deliver fair dealing outcomes and competent representatives who provide quality
advice. Please refer to Annex B for the questionnaire and feedback channels. The
completed questionnaire should reach MAS by 1 May 2012.

***

Feedback should be provided to MAS through:

(i) Emailing your general comments to us at fairfeedback@mas.gov.sg;(ii) Filling
in the FAIR Questionnaire (1 May 2012) on our MAS website at the following link
http://www.mas.gov.sg/fair/;
or(iii) Mailing a hardcopy response to 10 Shenton Way, MAS Building,
Singapore 079117, marked for the attention of “Capital Markets Intermediaries
Department – FAIR”.

Please provide us with the following when submitting your
feedback:

(i) your name;(ii) your email address;(iii) your contact number;
and(iv) an indication of whether you are currently working in the financial
advisory industry.

Please note that any submission received may be made public unless
confidentiality is specifically requested for the whole or part of the
submission.

Wednesday, March 28, 2012

To protect and benefit customers of life insurance and financial advisory services, the Monetary Authority of Singapore (MAS) will be launching the Financial Advisory Industry Review, or FAIR. This was announced by MAS Managing Director Mr Ravi Menon at the Life Insurance Association’s 50th Anniversary dinner.

The five key thrusts of the review include:

Raising the Competence of Financial Advisory Representatives
The current minimum entry requirement of four GCE “O” level passes for Financial Advisers (FAs) will be reviewed to keep pace with Singapore’s rising educational levels, the increasing complexity of products and higher public expectations.

Raising the Quality of Financial Advisory Firms
MAS will review the management expertise and financial resources of financial advisory firms to ensure that they are well managed and financially sound. The review will also be taken into consideration when admitting new firms.

Making Financial Advice a Dedicated Service
Noticing a worrying trend of FA representatives branching out to conduct other activities, some of which are in conflict with their advisory role, FAIR will review the activities that FA representatives can conduct outside their advisory role to ensure that representatives continue to put their customers first and will not be distracted from their professional focus.

It will also review the practice by FA firms and representatives who tap on “introducers” to reach out to customers, as well as the scope of financial advisory activities conducted by insurance brokers.

Lowering Distribution Costs of Insurance ProductsTo make insurance more affordable for consumers, MAS will also review the commission-based, multi-tier distribution structure, where representatives in upper tiers have a share of commissions earned by lower-tier representatives. The review will examine if such a structure aligns the interest of representatives with customers’ long-term interests, or adversely incentivises representatives to sell products that pay them higher commissions.

Promoting a Culture of Fair Dealing
FAIR will also promote a culture of fair dealing by financial institutions, to instil customer trust in life insurance and financial advisory services.

Financial advisory sector here faces shake-up

The financial industry is in for another dramatic shake-up, this time involving tens of thousands of insurance agents and financial advisers that make their living through commissions.

The Monetary Authority of Singapore (MAS) said on Monday that it will launch a Financial Advisory Industry Review (Fair) aimed at lowering the costs of these products and raising the quality of advice given by those who sell them.

Chief among the sweeping proposals is a move to relook the cost of buying life insurance policies. This is currently a tiered structure which sees the customer paying commissions not only to his agent, but also his supervisors.

Financial advisers, who can sell a variety of investments, will have to be better-educated to serve a more literate and sophisticated public, as well as keep up with more complex products on the market.

'The overriding aim of Fair is to protect and benefit the consumer. Putting the customer first - that must be at the heart of all our efforts,' Mr Ravi Menon, managing director of MAS, said on Monday.

He announced the launch of the review at the 50th anniversary dinner of the Life Insurance Association on Monday, taking many in the room by surprise.

Among those left most worried by the impending changes are senior agents and managers who have benefited for decades by what Mr Menon described as a 'commission-based, multi-tier distribution structure'.
'Take for example a whole life insurance policy,' he said.

'Together, the total commissions and overrides earned by the representative and his supervisors would be equivalent to about 160 per cent of the insurance policy's annual premium.'

He added that these commissions, together with other costs, can account for as much as 8 per cent of the total premiums paid by a customer.

The panel will examine whether this commission structure aligns the interest of representatives with the long-term interest of consumers or adversely induces representatives to sell products that pay them higher commissions.
Mr Menon noted that Britain and Australia have already banned commission payments and are moving to a fee-based model.

Another key aim of the review is to increase the current entry requirement of four GCE O-level passes for financial advisers. This is too low and does not reflect Singapore's rising education levels or the increasing complexity of products, said Mr Menon.

In this area, Singapore is again behind Britain and Australia. Australia's current requirement is a diploma, and Britain will match that by the end of this year.

'I am heartened to note that some insurers are already consciously recruiting better qualified individuals... but we must level the playing field and make this the industry norm,' Mr Menon said.

MAS has noticed a worrying trend of representatives going into other activities, including moneylending and selling real estate.

It will look at banning them from these other activities deemed 'in clear conflict' with financial advisory activities.
'Some financial advisory representatives have even applied to the Casino Regulatory Authority for a junket promoter licence,' said Mr Menon.

Mr Seah Seng Choon, executive director of the Consumers Association of Singapore, said the changes were long overdue for an industry that needs 'a dose of enhanced professionalism'.

'Consumers can look forward to having advisers who are better qualified, and to a higher degree of professionalism in the industry.'

Mr Tan Kin Lian, former chief executive of NTUC Income and a long-time proponent of lower costs for financial products, also cheered the changes.

'MAS has re-affirmed quite strongly that the interests of the consumer is very important. Commissions should be capped, or even removed entirely, as consumers are paying far too much and are not aware of this,' he said.
Major industry players seemed to take the news in stride.

But Mr Tan Hak Leh, president of the Life Insurance Association, cautioned that there must be in-depth consultation with practitioners and sufficient time to 'assess the effectiveness and viability of the recommendations made'.

Monday, December 12, 2011

Maybank is offering promotional interest rate up to 1.35% p.a. for new placements of S$25,000 to S$1,000,000 to iSavvy Time Deposits. First customers with minimum S$200,000 placement will receive passes to Universal Studio Singapore.

Thursday, November 10, 2011

Dear friends, note for people going to buy PI car. Do get a proof that your IU has been register with LTA. A friend of mine was fined for not having an IU in his car which he have been driving for 2.5 yrs with an IU. He went to Vicom for inspection and they say his IU is nt registered under his car license plate and have to change a new one with IMMEDIATE effect.The technician say that recently a lot of PI car have this problem, as ERP system has just been upgraded so they are about to detect now. Anyway the change of IU cost around $160.

Thursday, September 22, 2011

Learn about advancements in the diagnosis and treatment of heart valve disease. Advanced imaging
capability and techniques like 3D echocardiography and percutaneous heart valve replacement allow
patients to be diagnosed more quickly and accurately.

Friday, September 2, 2011

TO ADDRESS the issue of escalating claims, non-injury motor accident claims of $3,000 or less now
have to be heard first by the Financial Industry Disputes Resolution Centre (FIDReC) before court
proceedings can start.

This has been raised from the $1,000 limit previously.

The move is in line with recommendations put forward by the Motor Insurance Taskforce last year.

According to a release issued yesterday by the Consumers Association of Singapore, the industry
average amount for third party property damage claims is about $4,000. As such, the move to bump up
the limit to $3,000 is expected to reduce the number of disputes brought to court. FIDReC has also
beefed up its resources so that it will be able to handle the likely increase in the number of cases.

'GIA welcomes the increased FIDReC-NIMA limit which will further enhance the promotion of amicable
and faster settlement of disputes through the mediation process,' said Derek Teo, president of the
General Insurance Association of Singapore.

Limit for non-injury cases raised from $1,000
MOTORISTS who want to make non-injury accident claims of up to $3,000 will now have to go before
the Financial Industry Disputes Resolution Centre (Fidrec) before they can file them in court.

The $3,000 limit is three times the previous cap of $1,000.

The Consumers Association of Singapore, a member of the Motor Insurance Taskforce which lobbied
for the limit to be raised, said the new ceiling is more reflective of the average claim of $4,000.

The taskforce, which views Fidrec as yet another way to tackle spiralling costs, hopes the new limit will
pave the way for more claims to be settled quickly and cheaply - without the appointment of lawyers.

Since its formation in March 2008, Fidrec has heard 218 motor accident cases and helped resolve 213
of them - even if the number is a fraction of the approximately 1,200 non-injury accident claims that go to
court each year.

The taskforce reckons the $3,000 limit will allow Fidrec to handle more cases.

But lawyers point out that claimants may simply jack up their claims to exceed the new limit to avoid the

Fidrec process - one which requires claimants to turn up personally to file and present their cases.

General Insurance Association (GIA) president Derek Teo, a Fidrec proponent, said: 'There'll be people
who will bump up their claims to circumvent this... but they will have to produce substantive evidence in
court to show that their claims are justified.'

He added that the 'main intent is for all parties to reach an amicable settlement by themselves'.

However, should they need the help of a third party to resolve a case, there is Fidrec.

But motorists can still file their claims in court if they are not happy with Fidrec's decision, which is
handed down by retired judges.

The Motor Insurance Taskforce, whose members include the GIA, the Automobile Association of
Singapore, the Land Transport Authority, the Traffic Police and the Monetary Authority of Singapore,
had actually recommended the Fidrec cap be set at $10,000.

Observers said, however, this would be detrimental to the income of many lawyers.

A lawyer who specialises in accident claims said yesterday his business had already dipped since
Fidrec was formed. But he could not substantiate his claim, nor did he want to be named.

The taskforce has introduced several measures in recent years to tackle rising costs. These include
requiring motorists to file an accident report with their insurers - no matter how minor the accident - within 24 hours, and submit on-site photos of the vehicles involved.

Also, motorists who file insurance claims against another party after an accident have to contact the
other driver's insurer before getting their vehicle repaired. The other driver's insurer will have 48 hours to
inspect the damaged vehicle. If it fails to do so, it automatically waives its right to contest the claim.

The measures have met some success.

Last year, motor claims amounted to $767 million. If the $11.6 million attributed to flood damage was excluded, the sum would have been close to the $742 million posted three years ago - even though there
are now more vehicles on the road.

95% of countries, the medical trend or cost rate exceeded that of inflation. Singapore's medical cost rate is estimated at 8.4% this year, compared with 7.4% last year.

One very important way to cover the cost of health care is through insurance. Risk pooling enables insurers to offer cover to a fairly large group, at premiums that are relatively affordable.

It is prudent to take up such insurance while you are relatively young and healthy. Once illnesses develop, insurers may levy an extra charge, or even refuse coverage for what they call pre-existing conditions.

3 ways you can enjoy heavy subsidies

Acute public hospital wards

MediSave which earn 4% more then OA in your CPF

MediShield and private Integrated Shield plans.

MediSave- Limited amount on inpatient and outpatient expenses. Important to note that Medisave is still cash. It should be prudently used. While you are working, the contribution rate to Medisave will vary depending on your age. The contribution rate is also adjusted annually to keep pace with inflation.

Should you retire or cease working and your contributions stop, cash in Medisave could run out fairly quickly given high health care costs.

Priviate Integrated Shield - Hospital and surgical (H&S) plans are one of the most basic of health covers, and are a must for most people unless you have enough wealth to self-pay. It is also important to take up H&S plans for your children.

Many people put off taking up a H&S plan because their employers may offer very good and comprehensive cover. But you will need a private plan should you stop working. Waiting until retirement to take up one is untenable because at a later age you may develop conditions that make you uninsurable.

Why I keep emphasising on Private Integrated Shield? It the most afforadable plan that you can get using your CPF medisave account.

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About Me

A Monetary Authority of Singapore (MAS) licensed Financial Planner and a member of IFPAS (Insurance and Financial Practitioners Association of Singapore) who is passionate about educating individuals about financial planning.
I hope you can benefit from the posts from this site.

If you would like to do financial planning / having some queries with regards to your current plans (comprehensive review of your financial holdings e.g. to check if they meet your life/retirement goals) / would like to engage my services.

DISCLAIMER: This blog is for your information only and does not have any regards to your specific investment objectives, financial situation and any of your particular needs. The information provided serves as general advice & for educational purposes only.